Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2025.102647
Cody Couture, Ann L. Owen
We merge panel survey data on consumer sentiment with data on U.S. political advertisements run from 2013 to 2020 and estimate dynamic panel data models predicting the effect of positive, negative, and contrasting ads on several measures of consumer sentiment. We find that political ads during Presidential election cycles have a significant impact. In particular, a higher intensity of positive political ads with an economic theme makes consumers more optimistic about their own current and future financial positions and the future state of the economy. Our findings also suggest that political ads impact sentiment through an emotional appeal rather than by providing information to viewers about economic fundamentals.
{"title":"Political advertising and consumer sentiment: Evidence from U.S. presidential elections","authors":"Cody Couture, Ann L. Owen","doi":"10.1016/j.ejpoleco.2025.102647","DOIUrl":"10.1016/j.ejpoleco.2025.102647","url":null,"abstract":"<div><div>We merge panel survey data on consumer sentiment with data on U.S. political advertisements run from 2013 to 2020 and estimate dynamic panel data models predicting the effect of positive, negative, and contrasting ads on several measures of consumer sentiment. We find that political ads during Presidential election cycles have a significant impact. In particular, a higher intensity of positive political ads with an economic theme makes consumers more optimistic about their own current and future financial positions and the future state of the economy. Our findings also suggest that political ads impact sentiment through an emotional appeal rather than by providing information to viewers about economic fundamentals.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102647"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143170598","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2025.102643
Vincent Hoffmann , Luu Duc Toan Huynh , Mei Wang
This study examines the impact of contemporary invasions on stock markets within advanced and emerging economies. By studying various conflicts and their progression into wars, we aim to expose underlying patterns in stock market reactions. First, we conduct an event study to assess the stock market reactions to seventeen modern invasions from 2001 to 2022. We calculate cumulative abnormal returns for the respective stock market and each invasion. Furthermore, we introduce a regression model highlighting differences in stock market reactions between advanced and emerging countries. The regression model contributes to understanding the relationship between cumulative abnormal returns and each country’s geographic and economic characteristics. Invasions generally have a negative impact on stock markets, with emerging markets showing greater sensitivity and more negative reactions to invasions than advanced stock markets. Furthermore, the findings suggest that underlying drivers play a role in explaining abnormal returns during invasions.
{"title":"What drives abnormal returns of stock markets in wartime? Evidence from 17 invasions","authors":"Vincent Hoffmann , Luu Duc Toan Huynh , Mei Wang","doi":"10.1016/j.ejpoleco.2025.102643","DOIUrl":"10.1016/j.ejpoleco.2025.102643","url":null,"abstract":"<div><div>This study examines the impact of contemporary invasions on stock markets within advanced and emerging economies. By studying various conflicts and their progression into wars, we aim to expose underlying patterns in stock market reactions. First, we conduct an event study to assess the stock market reactions to seventeen modern invasions from 2001 to 2022. We calculate cumulative abnormal returns for the respective stock market and each invasion. Furthermore, we introduce a regression model highlighting differences in stock market reactions between advanced and emerging countries. The regression model contributes to understanding the relationship between cumulative abnormal returns and each country’s geographic and economic characteristics. Invasions generally have a negative impact on stock markets, with emerging markets showing greater sensitivity and more negative reactions to invasions than advanced stock markets. Furthermore, the findings suggest that underlying drivers play a role in explaining abnormal returns during invasions.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102643"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143170600","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2024.102630
Yannick Bury , Lars P. Feld , Ekkehard A. Köhler
Cooperative fiscal federalism needs multi-level consent to decide on the allocation of intergovernmental transfers. We study how parliamentary representation of municipalities on the federal level influences the allocation of federal transfers to municipal governments under this type of federalism. Using a regression discontinuity design in close electoral races, we find that a directly elected member of the federal parliament, who belongs to the party that leads the federal government, induces higher infrastructure transfers from the federal government to a local jurisdiction. However, our results show that this effect only unfolds, if the parliamentarian's party is simultaneously leading the state government. Moreover, we identify party competition on the local level as a motive behind the strategic use of federal funds. Thus, our results suggest that federalism inherently entails restrictions on misusing intergovernmental transfers for political reasons.
{"title":"Do party ties increase transfer receipts in cooperative federalism? – Evidence from Germany","authors":"Yannick Bury , Lars P. Feld , Ekkehard A. Köhler","doi":"10.1016/j.ejpoleco.2024.102630","DOIUrl":"10.1016/j.ejpoleco.2024.102630","url":null,"abstract":"<div><div>Cooperative fiscal federalism needs multi-level consent to decide on the allocation of intergovernmental transfers. We study how parliamentary representation of municipalities on the federal level influences the allocation of federal transfers to municipal governments under this type of federalism. Using a regression discontinuity design in close electoral races, we find that a directly elected member of the federal parliament, who belongs to the party that leads the federal government, induces higher infrastructure transfers from the federal government to a local jurisdiction. However, our results show that this effect only unfolds, if the parliamentarian's party is simultaneously leading the state government. Moreover, we identify party competition on the local level as a motive behind the strategic use of federal funds. Thus, our results suggest that federalism inherently entails restrictions on misusing intergovernmental transfers for political reasons.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102630"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143171618","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2024.102634
Ronen Gradwohl , Yuval Heller , Arye Hillman
We examine the influence a self-interested social-media platform can have on election outcomes. Using the framework of the Condorcet Jury Theorem, we explore the effect of additional information via private messages from the platform, modeled through Bayesian persuasion. We establish conditions under which the platform can sway the majority voting outcome, assuming voters vote sincerely. Additionally, we demonstrate that the information disseminated by the platform can sometimes be biased in the opposite direction of the platform’s interests.
{"title":"How social media can undermine democracy","authors":"Ronen Gradwohl , Yuval Heller , Arye Hillman","doi":"10.1016/j.ejpoleco.2024.102634","DOIUrl":"10.1016/j.ejpoleco.2024.102634","url":null,"abstract":"<div><div>We examine the influence a self-interested social-media platform can have on election outcomes. Using the framework of the Condorcet Jury Theorem, we explore the effect of additional information via private messages from the platform, modeled through Bayesian persuasion. We establish conditions under which the platform can sway the majority voting outcome, assuming voters vote sincerely. Additionally, we demonstrate that the information disseminated by the platform can sometimes be biased in the opposite direction of the platform’s interests.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102634"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143170591","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2024.102638
Moritz Grebe, Peter Tillmann
This paper studies the impact of dissent in the ECB’s Governing Council on uncertainty surrounding households’ inflation expectations. We conduct a randomized controlled trial using the Bundesbank Online Panel Households. Participants are provided with alternative information treatments concerning the vote in the Council, e.g. unanimity and dissent, and are asked to submit probabilistic inflation expectations. The results show that the vote is informative. Households revise their subjective inflation forecast after receiving information about the vote. Information about unanimity or dissent causes a wider individual distribution of future inflation for those households that were relatively certain before the treatment. For the remaining 60% of households, this information reduces uncertainty. Information about dissent increases uncertainty more than information about a unanimous vote, though the difference is not statistically significant. A unanimous vote unambiguously reduces inflation uncertainty for households with anchored inflation expectations.
{"title":"Household expectations and dissent among policymakers","authors":"Moritz Grebe, Peter Tillmann","doi":"10.1016/j.ejpoleco.2024.102638","DOIUrl":"10.1016/j.ejpoleco.2024.102638","url":null,"abstract":"<div><div>This paper studies the impact of dissent in the ECB’s Governing Council on uncertainty surrounding households’ inflation expectations. We conduct a randomized controlled trial using the Bundesbank Online Panel Households. Participants are provided with alternative information treatments concerning the vote in the Council, e.g. unanimity and dissent, and are asked to submit probabilistic inflation expectations. The results show that the vote is informative. Households revise their subjective inflation forecast after receiving information about the vote. Information about unanimity or dissent causes a wider individual distribution of future inflation for those households that were relatively certain before the treatment. For the remaining 60% of households, this information reduces uncertainty. Information about dissent increases uncertainty more than information about a unanimous vote, though the difference is not statistically significant. A unanimous vote unambiguously reduces inflation uncertainty for households with anchored inflation expectations.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102638"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143170594","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2024.102640
Daniel Meierrieks
We examine the relationship between terrorism and economic inequality for 163 countries between 1980 and 2018. We provide robust evidence that more terrorist activity results in higher levels of income inequality, where this relationship is especially pronounced for democratic countries. As an extension, we also study the role of terrorism in wealth inequality, uncovering similar linkages. Our findings imply that democracies see lower levels of income inequality in the absence of terrorism but increases in inequality as terrorist activity grows, while inequality in non-democratic countries is not affected by terrorism. Exploring potential transmission channels, we show that terrorism does not have distributional consequence by damaging the economy. Rather, in democracies terrorism leads to lower levels of redistribution via taxation and transfers. This finding is consistent with our theoretical argument that terrorism elicits a policy response in the form of lower levels of redistribution especially from democratic governments due to their dependence on broad electoral support to stay in power.
{"title":"The effect of terrorism on economic inequality in democracies and non-democracies","authors":"Daniel Meierrieks","doi":"10.1016/j.ejpoleco.2024.102640","DOIUrl":"10.1016/j.ejpoleco.2024.102640","url":null,"abstract":"<div><div>We examine the relationship between terrorism and economic inequality for 163 countries between 1980 and 2018. We provide robust evidence that more terrorist activity results in higher levels of income inequality, where this relationship is especially pronounced for democratic countries. As an extension, we also study the role of terrorism in wealth inequality, uncovering similar linkages. Our findings imply that democracies see lower levels of income inequality in the absence of terrorism but increases in inequality as terrorist activity grows, while inequality in non-democratic countries is not affected by terrorism. Exploring potential transmission channels, we show that terrorism does not have distributional consequence by damaging the economy. Rather, in democracies terrorism leads to lower levels of redistribution via taxation and transfers. This finding is consistent with our theoretical argument that terrorism elicits a policy response in the form of lower levels of redistribution especially from democratic governments due to their dependence on broad electoral support to stay in power.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102640"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143170590","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2024.102621
Giuseppe Dari-Mattiacci , Giovanni Immordino , Francesco F. Russo
One fourth of the 196 countries we surveyed adopts some form of day fines — that is, fines that increase with the wealth of the offender — and does so for moderate, non-monetary violations. We offer a model of optimal deterrence with decreasing marginal utility of wealth and unequal wealth distribution that rationalizes this pattern. We show that uniform fines are optimal when harm from crime is low, non-monetary sanctions when it is high, and day fines in the intermediate region. The introduction of day fines reduces the (optimal) use of non-monetary sanctions and restores deterrence for the rich, as compared to uniform fines. The scope for day fines increases with wealth inequality and decreases with the cost of wealth verification.
{"title":"Fines for unequal societies","authors":"Giuseppe Dari-Mattiacci , Giovanni Immordino , Francesco F. Russo","doi":"10.1016/j.ejpoleco.2024.102621","DOIUrl":"10.1016/j.ejpoleco.2024.102621","url":null,"abstract":"<div><div>One fourth of the 196 countries we surveyed adopts some form of day fines — that is, fines that increase with the wealth of the offender — and does so for moderate, non-monetary violations. We offer a model of optimal deterrence with decreasing marginal utility of wealth and unequal wealth distribution that rationalizes this pattern. We show that uniform fines are optimal when harm from crime is low, non-monetary sanctions when it is high, and day fines in the intermediate region. The introduction of day fines reduces the (optimal) use of non-monetary sanctions and restores deterrence for the rich, as compared to uniform fines. The scope for day fines increases with wealth inequality and decreases with the cost of wealth verification.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102621"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143170592","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Geopolitical Risks, Political Tensions and the European Economy","authors":"Jamel Saadaoui, Amélie Barbier-Gauchard, Jan-Egbert Sturm","doi":"10.1016/j.ejpoleco.2025.102644","DOIUrl":"10.1016/j.ejpoleco.2025.102644","url":null,"abstract":"","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102644"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143170601","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2024.102619
Mihai Mutascu , Cristina Strango , Camelia Turcu
We investigate the impact of social media (e.g., Facebook, Instagram, Twitter, and LinkedIn) on left-wing and right-wing populist voting patterns within the European Union 27 (EU-27). Our empirical analysis is based on an Ordered Probit model, over 2014–2020. We differentiate between politically oriented communication and general communication, through social media. We find that politically oriented communication on platforms like Facebook and LinkedIn contributes to the electoral success of right-wing parties. In contrast, active engagement of left-wing parties on social media platforms, such as Facebook, Twitter, and LinkedIn appears not to enhance their electoral success. This suggests that right-wing parties effectively leverage platforms like Facebook and LinkedIn to disseminate populist ideologies, while left-wing parties face challenges with their engagement strategies on these platforms.
{"title":"Online social media and populism in Europe","authors":"Mihai Mutascu , Cristina Strango , Camelia Turcu","doi":"10.1016/j.ejpoleco.2024.102619","DOIUrl":"10.1016/j.ejpoleco.2024.102619","url":null,"abstract":"<div><div>We investigate the impact of social media (e.g., Facebook, Instagram, Twitter, and LinkedIn) on left-wing and right-wing populist voting patterns within the European Union 27 (EU-27). Our empirical analysis is based on an Ordered Probit model, over 2014–2020. We differentiate between politically oriented communication and general communication, through social media. We find that politically oriented communication on platforms like Facebook and LinkedIn contributes to the electoral success of right-wing parties. In contrast, active engagement of left-wing parties on social media platforms, such as Facebook, Twitter, and LinkedIn appears not to enhance their electoral success. This suggests that right-wing parties effectively leverage platforms like Facebook and LinkedIn to disseminate populist ideologies, while left-wing parties face challenges with their engagement strategies on these platforms.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102619"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143171619","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-01DOI: 10.1016/j.ejpoleco.2025.102642
Marco A. Marini, Samuel Nocito
We investigate whether climate activism favors pro-environmental consumption by examining the impact of Fridays for Future (FFF) protests in Italy on second-hand automobile sales in rally-affected areas. Leveraging data on 10 million automobile transactions occurring before and after FFF mobilizations, we exploit rainfall on the day of the event as an exogenous source of attendance variation. Our findings reveal a reduction in both the total number of cars purchased and their average CO2 emissions, with an uptick in the market share of low-emission vehicles and a corresponding decrease in the market share of high-emission counterparts. We test for two potential mechanisms at work: one mediated by an increase in environmental awareness, the other induced by a rational anticipation of future stricter regulations. Empirical evidence suggests that the latter mechanism is generally more pronounced than the former. However, the first channel seems likely to be at work among individuals aged 18–25, a group that is potentially more involved in the FFF movement.
{"title":"Climate activism favors pro-environmental consumption","authors":"Marco A. Marini, Samuel Nocito","doi":"10.1016/j.ejpoleco.2025.102642","DOIUrl":"10.1016/j.ejpoleco.2025.102642","url":null,"abstract":"<div><div>We investigate whether climate activism favors pro-environmental consumption by examining the impact of Fridays for Future (FFF) protests in Italy on second-hand automobile sales in rally-affected areas. Leveraging data on 10 million automobile transactions occurring before and after FFF mobilizations, we exploit rainfall on the day of the event as an exogenous source of attendance variation. Our findings reveal a reduction in both the total number of cars purchased and their average CO2 emissions, with an uptick in the market share of low-emission vehicles and a corresponding decrease in the market share of high-emission counterparts. We test for two potential mechanisms at work: one mediated by an increase in environmental awareness, the other induced by a rational anticipation of future stricter regulations. Empirical evidence suggests that the latter mechanism is generally more pronounced than the former. However, the first channel seems likely to be at work among individuals aged 18–25, a group that is potentially more involved in the FFF movement.</div></div>","PeriodicalId":51439,"journal":{"name":"European Journal of Political Economy","volume":"86 ","pages":"Article 102642"},"PeriodicalIF":2.3,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143170597","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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